How is VAT generally applied to international transactions between EU countries?

When evaluating how VAT is applied to international transactions between EU countries, the correct choice reflects the nuances of the value-added tax system within the EU framework. Goods are generally moved free of VAT under what is known as the "intra-community supply of goods." This means that when goods are sold and transported from one EU member state to another, the supplier does not charge VAT. Instead, the responsibility to account for VAT falls on the buyer in their home country, where they would pay the VAT at their local rate, allowing for cross-border trade to occur without immediate VAT payments.

For services, however, the VAT treatment can differ. It depends on the nature of the services and often the locations of both the supplier and the customer. In general, services may be subject to VAT based on the 'place of supply' rules, which can vary depending on the type of service provided. For instance, business-to-business (B2B) services are typically taxed in the member state where the customer is located, which is reflected in the reverse charge mechanism that allows the customer to account for VAT on their VAT return.

In this context, the other options do not accurately reflect the VAT treatment in the EU. Claiming that all transactions are exempt from VAT overlooks